Company cars (Table C)
The new system of emissions-based tax charges on company cars was
introduced last year and continues. However, there are two changes:
* the minimum 15% benefit will apply to ratings up to 159
g/km, tightened from 169 g/km in 2002/03
* the taxable benefit for free fuel used in a company car is
now the same emissions-based percentage multiplied by a set figure
Are you sure the benefit of car and
fuel are worth the tax you pay?
Personal Service Companies
The "IR35" rules apply PAYE and NIC where workers provide
their personal services through a company to someone who would otherwise
be their employer. Originally, only "business employers"
were included, which meant that a personal service company could
be a very tax efficient arrangement for employing domestic staff
such as nannies and butlers. The Budget has brought domestic staff
within the IR35 rules from 10 April 2003, removing this advantage.
Employee Share Schemes
A number of amendments are made to the rules on share-based remuneration
and share option schemes. These do not change the basic rules for
* approved schemes only lead to CGT on eventual disposal of
* unapproved schemes lead to income tax, and often NIC, on acquisition
of the shares.
However, a number of helpful changes remove unnecessary tax charges,
for example where an employee leaves a scheme early as a result
of injury, disability, redundancy or retirement. It will also be
possible to exercise approved options more frequently than once
every three years.
Increasing numbers of employees are working some or all of their
time at accountants. This has led to disputes over deducting household
expenses as "incurred in the job" - but the
rules are very restrictive and few employees can claim. The Budget
will now allow an employer to pay up to £2pw to an employee,
with no tax charge arising, to subsidise extra costs incurred in
working from accountants.
The Budget introduces changes to a number of existing exemptions:
* increasing the ceiling for annual staff parties from £75
to £150 a head
* increasing the limit on long service awards from £20
to £50 per year of service
* raising the limit on non-cash gifts from third parties from
£150 to £250
* removing the limit on the number of "free breakfasts"
which can be offered as an incentive for cycling to work (currently
These new limits encourage generosity